Overview of the Latest Cost of Living Updates for 2024
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Each year, the IRS, Social Security Administration, and other federal agencies make adjustments to policies to account for inflation. These adjustments are called Cost of Living Adjustments COLA. While more changes continue to be set in motion, here is a brief overview of the main cost of living adjustments for 2024 so far.
2024 Cost of Living Adjustments (COLA)
Social Security
Increase in Benefits
Social Security benefits have been increased by 3.2% for 2024, meaning Social Security recipients and those on Supplemental Security Income (SSI) will see a 3.2% increase in their benefits effective January 2024. This translates to an average of about $59 more per month for Social Security retirees.
Increased Maximum Earnings
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $168,600 from $160,200. This will also take effect in January and is based on the increase in average wages.
Taxes
Standard Deduction Increased
The IRS has increased the standard deduction amounts for all filing statuses in 2024 to adjust for inflation. The new amounts are as follows:
Single filers and married filing separately: $14,600 (up from $13,850 in 2023)
Married filing jointly: $29,200 (up from $27,700 in 2023)
Heads of household: $21,900 (up from $20,800 in 2023)
Tax Brackets Widening
The IRS also announced its recent inflation adjustments, which included widening the seven income tax rate brackets for 2024. For a complete breakdown of the new brackets and rates, click here.
Retirement Accounts
Increase to 401(k) Contribution Limit
The IRS announced an increase in the amount individuals can contribute to their 401(k) plans in 2024. The limit has been increased to $23,000, up from $22,500 for 2023.
Increase to IRA Contribution Limit
The limit on annual contributions to an IRA was also increased to $7,000 in 2024. This is up from $6,500 in 2023.
Staying in the Know
The economic landscape is constantly evolving, with that regularly comes updates to these categories and many others. We’ll keep you up to date on the latest changes so you can plan accordingly.
Have questions about any of these cost-of-living updates or how they impact your unique tax and financial planning situation? Our experts are here to help. Contact us.